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Are These Big Bank Bigwigs Guilty of Fraud? You Decide

17 | By Shah Gilani

In 2008, the biggest banks in the Western world were being bailed out by their governments. Barclays, however, raised billions of dollars on its own to fortify its balance sheet and sidestep the inconvenience of having its executives’ compensation and bankers’ bonus pools subject to regulatory dictates.

Now it turns out that not everything was what it seemed.

Barclays Plc. (NYSE:BCS), the holding company that controls Barclays Bank Plc. (NYSE:BCS-PD), and four former top Barclays executives have been charged with fraud relating to how they raised the money that saved the bank and their paychecks from government oversight.

Whether they were just trying to save taxpayers money or their compensation packages will now be determined in criminal court.

But in the court of public opinion, the verdict’s already being tallied.

Get caught up on what they did and how, and then cast your vote here…

Guilty or innocent?

A Law Unto Themselves

Here are the facts of the case.

The United Kingdom’s Serious Fraud Office has charged the following with conspiracy to commit fraud by false representation in the bank’s June 2008 fundraising campaign…

  • Barclays Plc.
  • John Varley (Barclays former CEO)
  • Roger Jenkins (Barclays former chairman of investment banking for the Middle East)
  • Thomas Kalaris (the former chief of the bank’s wealth division)
  • And Richard Boath (the former head of the bank’s European financial institutions group)

In addition, Barclays, Mr. Varley, and Mr. Jenkins face the same charges over an October fundraising campaign, as well as charges of unlawful financial assistance.

While Varley and Jenkins face three counts of conspiracy to commit fraud by false representation and unlawful assistance, Boath and Kalaris each face one count of fraud.

A London court hearing is scheduled of July 3, 2017.

The case relates to the Bank and four former executives paying 322 million British pounds ($408 million USD) in fees for a 4.5-billion-pound loan facility. That loan facility was part of a 12 billion pound raise from Qatar Holding, part of the Qatar sovereign wealth fund, Challenger Universal, the vehicle of the former Qatari prime minister Sheikh Hamad bin Jassim bin Jabr al-Thani, and other investors.

The bank paid lenders fees as part of a so-called “advisory services agreement” (ASA), which in 2013 drew the attention of Britain’s Financial Conduct Authority, who warned Barclays it could face a fine over improper disclosure of the fees paid.

The FCA believed the fees were designed “not to obtain advisory services but to make additional payments, which would not be disclosed, for the Qatari participation in the capital raisings.”

Barclays claimed the fees were paid for advice.

You Be the Judge

Besides not disclosing payments to get the money from lenders, the SFO’s allegation of unlawful financial assistance stems from the fact that Barclays loaned Qatar the money it subsequently invested back into Barclays.

So, while the rest of the Western world’s biggest banks were getting bailed out by their governments (read: taxpayers), it appears Barclays separated itself from the herd by raising more than enough money to keep it from the clutches of government regulators who would impose strict conditions on bailed out banks. That would include compensation arrangements and their ability to pay dividends and buyback their shares to influence the price of their publicly traded stock, which of course impacts the value of options grants and options bonuses executives salivate over.

I say “appears” on account of believing that charged individuals are presumed innocent until proven guilty. At least, that’s our approach here in the U.S.

But public opinion isn’t constrained by presumptions.

Not only do I personally tend to presume when I know the facts, I tend to call a spade a spade.

And as far as fraud in this case, all I’ll say is that if it walks like a duck and quacks like a duck, it’s a duck.

There’s no way these criminals should be able to duck these charges.

We’ll see what happens.

What’s your verdict?

Sincerely,

Shah

17 Responses to Are These Big Bank Bigwigs Guilty of Fraud? You Decide

    • Carol M Kite says:

      A crime against simple decency. Life in America comes down to rampant corruption at every turn. Shocking when your neighborhood bank of 40 years has no honor, among thieves, to have your best interest at heart. Instead it’s to screw people out of whatever possible in a world of deceit. No more moral code to keep people honest anywhere in sight. Ashamed and embarrassed for humanity.

    • JOHN PYROKKAS says:

      GUILTY AS HELL.

      BUT, can you also please let the World know what the Bank of Cyprus and the Cyprus Popular Bank did to many thousands of people local and foreign customers? Do you know that they tried and managed with the State’s blessings to rake in billions Fraudulently, for the same reason of increasing their cash in hand liquidity?

      And do you know that the EU Commission and Eurogroup used Cyprus as a Testing Ground for their Bail In scheme? Pretty much as Hitler tested chemical agents on The Jewish People? Do you know that the above banks Violated the EU’s own Law in order to achieve their goal? Yet The EU refused to provide protection thus setting a precedence for violators of it’s own Legislation!! I can provide you with full details need be. No-one has been charged with the criminal charge of fraud. You see there are places on Earth who claim to be part of the Civilized Western World but in reality they are none less than Central Africa and worse so minded.

  1. ronald goddard says:

    taxpayers or other finance?

    surely they deserve a medal for not involving the taxpayers. it seems that if the government rips off the taxpayer thats ok..but don’t dare go outside the grid. why on earth pick on these guys. if they are found guilty, well by precedent, EVERY banker in the world is guilty. so,lets not split hairs here, let us charge the whole bloody lot

    in oz the n.a.b ‘borrowed’ AU$4.5bn, westpac AU$1.9bn and c.a.b. AU$700,000,000 and DID NOT ADVISE the asx which is a very big crime. when discovered after the revelation by the fed. two2 and a half years later the head honchos said oh it was only an investment. pig’s arse! they are guilty , guilty. but the status quo was maintained to protect the shareholders of a falling share price. and the list of recipients from that sordid ‘tarp’ was a very long one indeed, spread all over the planet justice, it must be done, but also be seen to be done. it seems that there is one law for some, small elite circle,and another more draconian law for the masses. ron from oz

  2. Norman Johnson says:

    Barclays saved tax payers a lot of money. No one was harmed. Everybody benefited. These bankers should be rewarded for their smart thinking.

  3. Knobby says:

    Team Qatar is known for their beyond-the-law, scruples-free dealings. They finance AlQadea and Hezbolla just to keep the price of petrochemicals high. They figured it would be nice to have a well-respected British bank in their back pocket. They have access to trillions, since the West has been paying them good honest money for their natural resources for 60+ years. And they make sure that cash is kept by an elite clique that is beholden to the group. This is how the MENA Princes and Kings manage their affairs in general.

    Team Qatar is so nasty, that they are being shunned by the public-beheading-every-week Saudis. And that is saying something.

    So are the Barclay’s bankers guilty of violating British law? It seems they are. Was it a bad idea? It is when it is advertised as a selfish play to keep their out-sized compensation intact. Not to mention they sold their allegiance to a gang with a bad rep.

  4. Mike says:

    What’s new in the conventional banking world, if your stupid enough to have one of these conventional lenders and not a credit union then you get what you deserve

  5. Jeff wilson says:

    The US govt is more quilty in my mind. Many of the institutions who were forced to take “bail out” money (which was actually a government LOAN) paid it back in 7 months. At a high rate of interest. The govt also benefitted from making these institutions issue as collateral a preferred convertible issue of stock. As these institutions repaid their LOANS the value of their stock went up pushing up the value of the conv. preferred for the lender ( Govt) many of the receiving institutions paid their loan back in seven months. They initially claimed that they did not need ” bail out” money to begin with. They were forced to take it supposedly because the Govt did not want the public to distinguish between which banks were really solvent and which ones were not. In the end institutions like Morgan Stanley, Goldman Sachs, B of A (who was forced to buy an insolvent Merrill Lynch) all paid high Dollars to the Govt . All while receiving negative publicity for wrecking the financial system. The Fed. Govt was a bigger culprit than some of these institutions. Although some were complicit and deserved to fail like Leyman did.

  6. Frank says:

    To say that executives don’t act in their own self in their own self interest is na├»ve. When the action might also benefit the institution they manage they manage, intent becomes cloudy. In the court of public opinion, guilty. However in the legal system nothing is assured…

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